More legislation for brokers to deal with
Financial services professionals are inundated with paperwork to ensure compliance with various pieces of legislation. In a few months time you’ll have to tailor your internal processes to accommodate provisions in the Protection of Personal Information Bill (PPIB). The bill was passed by Cabinet on 14 August 2009, but has yet to be signed into law. What does this bill mean for brokers in the insurance industry? Herman Botha, Broker Distribution Executive at Metropolitan Retail, shares his initial assessment…
The first thing intermediaries must understand is the motivation for the legislation. The PPIB was introduced to “protect individuals against the unlawful and sometimes intrusive collection and use of their personal information,” observes Botha. This ‘protection’ has to happen with due consideration for the ‘freedom’ of information flow.In other words the legislation had to allow for information exchanges necessary for existing business processes. It’s a difficult balance to strike. Once the PPIB is signed into law we will catch up with our European counterparts when it comes to enforcing the individual’s right to control the dissemination of his/her personal information.
Regulating how you handle personal data
The PPIB will regulate how companies (and financial intermediaries) deal with their clients’ personal information. In future you will have to adhere to the provisions contained in the PPIB when you collect, process, store, and disseminate personal information. Financial intermediaries are going to have to pay special attention to the Act because of the amount of personal data ‘mined’ during the financial planning and product procurement stages. Certain internal processes will also have to be reviewed – because the sharing of this data with certain financial services partners will be prohibited.
Botha provided an example of how the broker might have to modify current practices. Before contacting a new prospective customer, the intermediary must first check existing records to ascertain whether that individual has previously requested no further contact. If not, the intermediary may contact the person, but the potential customer must be given the chance to terminate the conversation immediately. Only if the potential customer provides their consent, then further collection and processing of personal information is allowed!
These requirements are going to make it increasingly difficult for brokers to conduct business by ‘cold calling’ potential clients. It will certainly cut into the number of ‘fresh’ leads available to the marketing and sales channel over time!
Proceeding without consent
There are exceptions to every rule. Insurance companies will be able to ‘process’ personal information without consent if they are protecting a clients’ ‘legitimate interest’. Botha provides another example: An insurance industry customer would have a ‘legitimate interest’ in an existing policy which he or she owned. Processing of personal information by the company, in order to protect this interest or right would be allowed, such as holding onto their contact information.
The PPIB is going to radically alter how insurance intermediaries deal with clients’ personal information. “Whilst all new Bills translate into added paperwork, firstly to understand the requirements and secondly to adhere to newly introduced processes and procedures, the long term benefits of a regulated industry which protects its customers are indisputable,” says Botha. Individuals benefit because their private information is protected from unintended use. And financial services professionals benefit as the industry takes another step toward professionalism.
Botha concludes: “Metropolitan supports the passing of this Bill. It will assist in the ongoing reform of the industry, align financial intermediaries with international standards and help in creating a sustainable future for all industry players.”
Editor’s thoughts: Abuse of personal information is rife in South Africa, particularly among certain ‘fly by night’ direct marketers. We expect the Protection of Personal Information Bill will create difficulties for many of the country’s diversified financial services providers, who might turn a blind eye to legal protections to exploit the synergies they so often boast about. Where do you believe personal information abuses occur – at financial intermediaries or at product providers? Add your comment below, or send it to gareth@fanews.co.za
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